Insider / ΚΥΠΕ
The increase in real estate prices continued in the third quarter of 2021, which is mainly supported by the purchase of apartments, as recorded by the house price index (CPI) released today by the Central Bank of Cyprus (CBC).
Specifically, there was a quarterly increase of 0.5% compared to 0.3% in the second quarter of 2021, while on an annual basis the index recorded an increase of 1.2% compared to 0.3% in the corresponding quarter of the previous year.
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House prices show a different picture in the third quarter from apartment prices, with the former recording reductions in several areas both on a quarterly and annual basis, in contrast to apartment prices, which record increases. Specifically, house prices decreased on an annual basis by 0.3%, while on a quarterly basis they recorded a small increase of 0.3% which is mainly due to increases that occurred in the provinces of Larnaca and Paphos.
On the contrary, apartment prices increased by 1% on a quarterly basis and by 4.5% on an annual basis. The increase that continues this quarter to be observed in apartment prices confirms once again, among other things, the continuing preference of domestic buyers and investors for apartments, in relation to homes in most provinces of Cyprus.
According to the CBC analysis, households seem to have a preference in the apartment market as their first home due to the new data formed in the market and specifically due to the subsidy of the interest rate for mortgages by the state and the increase in rental prices. The increase in the cost of construction materials continues to contribute to the increase of the price level, it is reported, since it is now felt in all sectors of the construction activity.
According to unofficial estimates by real estate market experts, the demand for real estate by foreign investors is also stabilizing, which in fact concerns lower value real estate compared to previous years, which is related to the cessation of KEP.
Price changes by province
During the third quarter of 2021, house prices on a quarterly basis increased in all provinces except the province of Nicosia, where they remained stable. Specifically, in Limassol an increase of 0.1% was recorded, in Larnaca 1.7%, in Paphos 1.6% and in Famagusta 0.6%.
Regarding the annual changes in the house price indices per province, an increase was recorded in Limassol, Larnaca and Paphos while in the other areas decreases were recorded. Specifically, in Limassol house prices increased by 2.9%, in Larnaca by 2.9% and in Paphos by 1%. On the contrary, in Nicosia prices continue to decline, showing a decrease of 1.2% on an annual basis, and in Famagusta 0.7%.
On a quarterly basis, house prices recorded increases in all provinces except Nicosia and Limassol. Specifically, in Larnaca, Paphos and Famagusta they increased by 2.1%, 1.5% and 0.7%, respectively. In contrast, in Nicosia and Limassol house prices fell by 0.3% in both provinces. On an annual basis, house prices fell in all provinces except Limassol and Larnaca where they rose by 2% and 2.1% respectively. Specifically, house prices in Nicosia decreased by 3%, in Paphos by 0.2% and in Famagusta by 2.6%.
Apartment prices on a quarterly basis increased in all provinces except the province of Famagusta, which decreased by 0.2%. Specifically, in Nicosia they increased by 0.7%, in Limassol 0.8%, in Larnaca 0.7% and in Paphos 1.7%. On an annual basis, apartment prices increased in all provinces. Indicatively, in Nicosia the prices increased by 2.4%, in Limassol 3.9%, in Larnaca 5.5%, in Paphos 3.6% and in Famagusta by 4.9%. It is noted that in the province of Paphos there was an increase after four consecutive quarters of reductions.
According to the CBC, the continuing increase in house prices is mainly due to domestic demand, which continues to record significant mobility. At the same time, according to unofficial estimates by real estate market experts, external demand is stabilizing, although it remains low and concerns lower value real estate.
The demand from foreign investors may be due in part to the promotion by the state of international headquartering for high-tech companies, which concerns investors moving their headquarters to Cyprus, as well as to the permanent residency plan in Cyprus. .
In conclusion, the CBC notes that the house price index in Cyprus continues to record an upward trend, driven by the purchase of apartments. The fact that the wave of price increases in basic building materials raises property prices regardless of demand, he adds, makes constant market monitoring necessary to see if demand will be affected.
Any impact on demand will adjust the current growth trend in the sector, he notes, despite various other problems facing the market, such as epidemiological developments and pressures from the current effort to sell real estate from the portfolios of banks and acquisition companies. credit to the market.
